China’s Power-Capacity Utilization at Record Low, Mirae Says

China’s power plants are operating at
a record-low utilization rate as many have closed, potentially
causing the most severe electricity shortage since 2004, Mirae
Assets Securities said.

“Burdened by bulging losses, many power generators have
shut,” Gordon Kwan, the Hong Kong-based head of energy research
at Mirae, said in an e-mailed note today. “High coal prices and
the capped electricity price have also reinforced fears” that
power rationing may spread to manufacturing hubs including
Guangdong, Zhejiang and Jiangsu, Kwan said.

China’s April electricity output fell from a seven-month
high as the cost of coal rose. Prices of the fuel at Qinhuangdao
port, a domestic benchmark, climbed for a sixth week as of May 9
to the highest in more than two years, according to the China
Coal Transport and Distribution Association.

The country may face a summer shortage of 30 gigawatts as
supply lags behind demand growth, the China Electricity Council
said on April 29. That deficit is about twice the shortfall
Japan faced after the March 11 earthquake, Mirae’s Kwan said.

China’s five largest power producers including China
Huaneng Group Corp. have limited purchases of coal to control
costs, Economic Observer reported today, citing a person it
didn’t identify.